US Dept of Education

Important Financial Aid Terminology

AARTS

Accrued Interest

If you choose not to make interest payments while in university, in your grace period, or during an authorized period of deferment, the interest will accumulate, and be added to your principal amount at repayment.

Award Letter

This is an official document issued by the Financial Aid Office. It lists all of the amounts, and types (subsidized and unsubsidized) of aid in your financial aid package. The Award Letter also includes the terms and conditions of your financial aid.

Award Year

The 12-month period during which you attend university, and for which your aid has been awarded.

BASD

Basic Active Service Duty

Capitalization

The process by which interest is added to the principal loan amount if you choose not to make interest payments (when otherwise required) while in university or in forbearance. This process increases the amount that must be repaid and will make your monthly payment larger

Cost of Attendance (COA)

These expenses include tuition, room and board, books and supplies, fees and the student’s living costs while attending university. The COA is determined by the University, using federal guidelines.

Cohort Default Rate

The percentage of a Universities Stafford borrower who defaults before the end of the fiscal year in which they entered repayment on their loans. The US Department of Education calculates this rate annually to determine the default experience of students who attended a particular school during a particular period of time. High default rates can result in the loss of a university’s ability to participate in the FFEL program.

Default

The failure of a borrower to make installment payments when due or to meet other terms of the promissory note or other written agreement(s) with the lender under circumstances where ED or the guarantor of the loan reasonably concluded that the borrower no longer intended to honour the borrowers obligation to repay a loan, provided that this failure persists for the most recent consecutive 270 day period or the most recent 330 day period.

Deferment

A period during which repaying loan principle is suspended as a result of the borrower meeting one or more of a number of situations or categories established by law. The borrower does not pay interest on subsidized loans during deferment; interest continues to accumulate during deferment of an unsubsidized loan.

Delinquency

The status of a loan when payment is late. Delinquency may be reported to a credit bureau after 30 days.

Disbursement

The lender's payment of loan funds to the University. Payment is made by cheque. Disbursement is usually made in two or more installments during the year

Expected Financial Assistance (EFA)

The Expected Financial Assistance is the amount of all other awards, scholarships, sponsorships etc that a student (or the parents on behalf of the student) may be in receipt of. This amount is included in the Cost of Attendance (COA) calculations.

Expected Family Contribution (EFC)

The Expected Family Contribution is the amount that a student and family (if required) are expected to contribute toward the Cost of Attendance (COA). This amount is based on the students or the family’s income and assets.

Federal Family Education Loan Program (FFELP)

Federal Family Education Loan Program is made up of Federal Stafford Loans (Subsidized and Unsubsidized) Federal PLUS loans (for parents) and Federal consolidated Loans. All of these are long-term loans insured by state or non-profit guaranty agencies that are reimbursed by the US government for all or any part of insurance claims paid by lenders.

Federal PLUS Loan (PLUS)

Parents may borrow this FFELP loan on behalf of their undergraduate, dependant children. Loans are made by lenders such as banks, credit unions, or savings and loan associations. Parents must not have an adverse credit history.

Federal Stafford Loan (Subsidised)

A FFELP loan that provides federally subsidized, low interest loans to students in undergraduate, graduate or professional programs. Subsidized loans are awarded on the basis of financial need.

Federal Stafford Loan (Unsubsidized)

A FFELP loan that provides low interest loans to students in undergraduate, graduate or professional programs. Unsubsidized loans are not awarded on the basis of financial need.

Financial Need

The difference between the students Cost of Attendance (COA) and the Expected Family Contribution (EFC) plus the students estimated financial assistance.

Forbearance

The process by which a repayment schedule can be restructured under certain conditions. The amount of the monthly payment may be temporarily reduced or suspended, or months may be added to the repayment term. You must contact your lender directly to receive forbearance.

Free Application for Federal Student Aid (FAFSA)

This is the application that a student must file to apply for financial aid. The FAFSA is printed and distributed free of charge by the U.S. Department of Education. It is also available online at www.fafsa.ed.gov.

Guarantee Fee

This is an optional fee charged by some guarantee agencies and deducted from loan proceeds prior to disbursement. This fee helps offset the administrative costs, and equates to up to 1% of your student aid.

Grace Period

A feature of Federal Stafford loans that gives you six months after you leave university or drop below half-time status before you must start making monthly payments on your loan.

Interest

The fee that is charged by the lender in exchange for lending the money. The interest rate, usually expressed as a percentage of the loan amount, may stay the same for the term of the loan (fixed rate) or it may change periodically (variable rate).

Master Promissory Note (MPN)

A legally binding document between the borrower and the lender that obligates him or her to repay the loan according to its terms.

Origination Fee

A fee charged by the federal government and deducted from the loan funds prior to disbursement. The fee is used to offset administrative costs.

Principal

The amount borrowed. This is the amount to which interest is charged.

SAR

The report sent directly to a student from ED’s Central Processing System (CPS) that summarises information submitted on the students FAFSA. It also provides financial-need calculations, including the students EFC based on submitted figures.

Satisfactory Academic Progress

The achievement of required Grade Point Average (GPA) within the defined timeframes, to ensure continued access to Financial Aid

Separation Date

The date noted by your university to indicate when you graduate, drop below half-time status or withdraw from university. The grace period on your loan begins on this date.

SMART

Sailor/Marine/American Council on Education Registry Transcript